* CEO flags cuts on top of 2 bln euros announced
* He says cash flow projections 'alarming'
* De Meo: We need a revolution
* CEO said Renault should mimic PSA's turnaround
PARIS, Sept 9 (Reuters) - Renault may have to cut
more costs than initially planned to get out of the red zone and
its cash-flow projections are alarming, the French carmaker's
new chief executive said in an internal memo seen by Reuters.
Luca de Meo, a former Volkswagen executive who
took over as CEO in July, wrote in the memo to unions and staff
that generating cash and restoring profitability was an
"The aim is to get back on the right track and to resolve
our most pressing problems as quickly as possible: treasury and
costs. This means we will perhaps need to go further than
planned with our cost-cutting efforts," he said.
Renault acknowledged in May that its global ambitions had
been unrealistic and announced plans to cut about 15,000 jobs,
shrink production and restructure French plants in a bid to save
2 billion euros ($2.4 billion).
De Meo did not give a figure in his memo for how much more
money the company may need to save.
Asked to comment on the memo, a Renault spokesman said De
Meo was working on a plan to transform the company by focusing
more on profitability than sales volumes.
Renault, like its Japanese alliance partner Nissan,
is rowing back on an aggressive expansion plan pursued by Carlos
Ghosn, its former boss-turned-fugitive.
The pair were among the weakest global automakers going into
the COVID-19 crisis, lacking a clear plan for using their
alliance to emerge from the slump and share the burden of
investing in electric vehicles and other technology.
De Meo said Renault was in a "red zone" as the COVID-19
pandemic had exacerbated existing problems, including a downward
trajectory in earnings since 2018, its ability to generate cash,
falling sales and new models that were not profitable enough.
"Our cash-flow projections are alarming. More than ever, we
must redouble our efforts to reach sustainable profitability,
and generate cash flow," he said.
De Meo said that Renault should model itself on the
turnaround path followed by French rival PSA, the
maker of Peugeot cars, which has focused on trimming costs and
producing more profitable vehicle ranges in recent years.
"In the next five years, we are going to do what PSA has
done in the past five years," he said.
De Meo also said Renault's brand had been diluted so it
would need to cut back on the number of products within
different ranges by about 30% and could also raise prices for
its small passenger cars, or C-segment, by 25% to 30%.
The CEO called on staff to get behind his turnaround plan.
Renault union members already staged sporadic strikes when the
earlier round of cost-cutting was announced in May.
"We will need to take decisions that are sometimes
difficult, but are necessary and positive for the company. I
would describe it as a revolution," he wrote in the memo.
"This revolution, which must be pushed forward by all the
men and women of the company, I'm calling it a 'Renaulution'."
($1 = 0.8508 euros)
(Reporting by Gilles Gillaume; Writing by Sarah White and
Christian Lowe; Editing by David Clarke)